We would like that you (Iftaa` Department) clarify some articles of the National Electric Company`s Provident Fund: Purchase of furniture and cars, the zero-interest loan and what relates to it regarding life insurance in conventional insurance companies. In addition, are the profits of the insurance contract returned to the insured at the end of the housing loan?
Answer:
All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.
First: The purchase of furniture and cars via contract of Murabaha to the client ordering the purchase should comply with the following conditions of Sharia:
1-Receiving the exact commodity from its first seller and taking possession of it in accordance with the related conditions of Sharia. This is in compliance with the following Hadith: Ibn Abbas (Allah be pleased with them) reported Allah's Messenger (PBUH) as saying: He who buys food-rain should not sell it until he has taken possession of it. Ibn Abbas (Allah be pleased with them) said: I regard everything like food (so far as this principle is concerned)." {Related by Bukhari & Muslim}.
2-paying the price of the commodity to the first seller for its isn`t permissible to deputize the client ordering the purchase to perform this task.
3-Signing the sale contract by the client ordering the purchase must be done after the Fund takes actual or constructive possession of the commodity itself. As far as the purchase promise is concerned, the client is allowed to sign it.
4-The employee of the bank clerk/financier must make sure that there is no contractual relationship between the client ordering the purchase and the first seller or his agent. This is in order to protect the Fund from fraudulent acts, or else the sale is considered invalid. However, if the client ordering the purchase had merely received a price proposal, then this is permissible.
Second: The housing loan must be conducted in accordance with the related conditions of Sharia and it isn`t permissible to pay the money to the client ordering the purchase, or else the loan becomes interest-based, which is forbidden in Sharia.
Third: In principle, commercial insurance is forbidden, as stated by Iftaa` councils and Fiqh academies. As for cooperative insurance, it is permissible because Allah the Almighty says {What means}: " Help not one another unto sin and transgression, but keep your duty to Allah. Lo! Allah is severe in punishment." {al-Mai`dah, 2}.
It isn`t conditioned that the profits must be returned to the insured because Islamic insurance is a contract of donation, but if the insurance company volunteered to do so, then this is permissible.
In conclusion, if these conditions and controls are met, then it is permissible to deal with the above provident fund. If not, then it isn`t permissible to deal with it. And Allah the Almighty knows best.